Supply and demand side benefits and costs of low cost urban electrification in Malawi : a case of Mbayani Township

This study investigates the supply and demand side benefits and costs of low cost urban electrification in Mbayani Township in Blantyre City in Malawi. The low cost urban electrification program, which used compact ready boards to provide electricity to poor households in Mbayani, is the first such program in the country. The study therefore examines the strategies used to assess how they impact the service provider and the newly electrified households in terms of benefits and costs in order to draw lesson for similar programs in the future. Using an interview, the study first examines the financing and planning strategies, technologies used, tariff design and cost recovery strategies on the supply side. On users' side, the study uses a sample household survey to examine the effects of electrification on households' expenditures, fuel use and on the small and medium scale enterprises sector in Mbayani. The study conducted key informant interviews to assess community leaders' perception of the program. In addition, the study reviews the South African electrification program from which it draws lessons for Malawi. On the supply side, the strategies used reduced electrification costs and enabled the service provider to use infrastructure that was previously under-utilised. However, limited financing and planning which ignored user needs has negative implications on the program outcomes. Electricity tariffs were based on a monthly flat rate tariff, which is likely to negatively impact on the utility's revenue. However, at the scale that the program was carried out, this impact is negligible. The tariff nevertheless ensures cost recovery over a period of 5 years. While lack of data from the utility hindered detailed analysis of the supply side impacts, the study concluded that the strategies used yielded net costs for the utility. On the demand side, the study found that electrification strategies used had a positive impact on households' energy burden and budget control and that most households have switched to electricity for lighting, powering radios and partly for cooking. Major barriers in maximising benefits are high costs of electrical appliances and poor supply quality. The study recommends that future programs should use holistic participatory planning and should diversify sources of funding. Electrification strategies must also target small and medium enterprises and promote support for acquisition of better quality appliances.

Reference:

Matinga, M. 2004. Supply and demand side benefits and costs of low cost urban electrification in Malawi : a case of Mbayani Township. University of Cape Town.